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10,000 points at 0.40 each
The program has 10,000 points outstanding. The cost to redeem one point is 0.40. That 0.40 is an example cost. Example 52 uses a different figure: a 0.95 standalone selling price, because the entity expects 9,500 of 10,000 points to be redeemed, and each point is a 1 dollar discount.
Outstanding points: 25% lower
Change outstanding points to 7,500 points while keeping the other example values the same.
Outstanding points: 25% higher
Change outstanding points to 12,500 points while keeping the other example values the same.
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Quick answer
What does the Loyalty points liability calculate?
What do outstanding loyalty points cost to redeem? This calculator uses outstanding points, and cost to redeem one point to estimate outstanding points times the cost you type immediately in your browser.
With the values currently entered, the result is $4,000.00 — if these points are redeemed. It also shows outstanding points, cost per point, and cost per 1,000 points.
How to use the Loyalty points liability
- Replace the example values with your own numbers.
- Review the result and supporting figures as they update automatically.
- Check the formula and assumptions before using the estimate for a decision.
Inputs used
- Outstanding points — entered in points
- Cost to redeem one point
Loyalty points liability formula
Redemption cost = outstanding points × cost to redeem one point.
Assumptions
- ASU 2014-09 Example 52, paragraphs 606-10-55-353 through 55-356, treats loyalty points as a performance obligation when they are a material right. In that example, customers earn 10,000 points, the entity expects 9,500 to be redeemed, and it estimates a standalone selling price of 0.95 per point. The contract liability is the leftover allocated selling price, not the cost of the reward. This page multiplies outstanding points by the redemption cost you type. The 0.40 default is an example cost.
- Paragraph 606-10-55-44 says an estimated selling price reflects the likelihood the customer will exercise the option. Lower the point count to the points you expect holders to redeem when you want that likelihood in the cost. Points you expect to expire unused come out of the count before you multiply.
Verify the inputs
Authoritative sources
These sources explain the definitions, factors, or rules behind this tool. Their geographic scope is shown because an official source for one country is not automatically valid somewhere else.
Sources do not endorse Calculum. Check the source date, scope, and your own documents before making a financial, tax, insurance, or reporting decision.
Practical guide
Loyalty points liability example and edge cases
Loyalty points liability, on this page, is what the outstanding points cost if holders redeem them. ASU 2014-09 Example 52 treats points that are a material right as a performance obligation and prices them from a standalone selling price. You type the cost per point.
Example: 10,000 points at 0.40 each
The program has 10,000 points outstanding. The cost to redeem one point is 0.40. That 0.40 is an example cost. Example 52 uses a different figure: a 0.95 standalone selling price, because the entity expects 9,500 of 10,000 points to be redeemed, and each point is a 1 dollar discount.
- Outstanding points
- 10,000 points
- Cost to redeem one point
- 0.4
Calculated result$4,000.00if these points are redeemed
10,000 points at 0.40 each is 4,000. That is the cost if every outstanding point is redeemed. Cost per 1,000 points is 400.
Example results use the default display profile. The calculator above follows your selected country and units.
How to read the result
- Read the 4,000 first. It is the point count times the cost you typed. In Example 52 the allocated amount for 10,000 points is 8,676, and after 4,500 points are redeemed the contract liability is 4,566. Those figures come from selling price, not from a 0.40 fulfillment cost.
- Paragraph 606-10-55-44 adjusts an estimated selling price for the likelihood the option is exercised. Example 52 expects 9,500 of 10,000 points to be redeemed. Type 9,500 in the point box when you want that same likelihood on your cost. 9,500 times 0.40 is 3,800.
Edge cases worth checking
The cost box holds the 1 dollar discount
Example 52 says each point is redeemable for a 1 dollar discount. Type 1 in the cost box and 10,000 points cost 10,000. That is the face discount, not the 8,676 allocated selling price and not the 4,566 contract liability left after 4,500 redemptions.
You expect 9,500 of 10,000 points
The page multiplies every point in the count. Example 52 drops the 500 points it does not expect holders to redeem before it prices the option. Change 10,000 to 9,500 and the cost at 0.40 becomes 3,800.
What changes the result most
Outstanding points
Measure outstanding points with the same unit shown beside the input. Convert first if your source uses another unit.
Cost to redeem one point
Use a current amount for cost to redeem one point. Include fees or recurring costs that belong in the same figure.
Try a different scenario
Small changes show whether the answer is stable or sensitive.
Outstanding points: 25% lower
7,500 points$3,000.00if these points are redeemed
Outstanding points: 25% higher
12,500 points$5,000.00if these points are redeemed
Cost to redeem one point: 25% higher
0.5$5,000.00if these points are redeemed
Common mistakes
Check outstanding points
ASU 2014-09 Example 52, paragraphs 606-10-55-353 through 55-356, treats loyalty points as a performance obligation when they are a material right. In that example, customers earn 10,000 points, the entity expects 9,500 to be redeemed, and it estimates a standalone selling price of 0.95 per point. The contract liability is the leftover allocated selling price, not the cost of the reward. This page multiplies outstanding points by the redemption cost you type. The 0.40 default is an example cost. Make sure this matches the number you enter.
Keep cost to redeem one point consistent
Paragraph 606-10-55-44 says an estimated selling price reflects the likelihood the customer will exercise the option. Lower the point count to the points you expect holders to redeem when you want that likelihood in the cost. Points you expect to expire unused come out of the count before you multiply. Use the same units and time period throughout the calculation.
Do not rely on one loyalty points liability scenario
Run a cautious case and an optimistic case. The range is often more useful than one exact-looking number.
Use this result well
What do outstanding loyalty points cost to redeem?
It does not replace a quote, contract, accountant, or local employment guidance.